Kim Lankford from Kiplinger explains why 2010 is the year of the Roth for the American. Because, starting in 2010, anyone can convert their traditional IRA to Roth IRA, making a conversion possible for even higher income earners.
Unlike IRA, Roth IRAs are funded with after-tax dollars, therefore any amount you convert from IRA to Roth will be taxed in full upon conversion at the prevailing margin rate. But here’s the good news. You don’t have to pay the tax all at once, if the conversion is done in 2010. You can defer the taxes until 2011 and 2012 tax returns.
Watch the video and see if conversion to Roth IRA does make any sense at all.
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2010 Contribution Limits
The 401(k) contribution limit for is $16,500 for those under 50 years old. For anyone between the ages of 50 and 59 ½ years old you also have the option of contributing an additional $5,500 as a catch-up contribution.The IRA contribution limit for is $5,000 for those under 50 years old, with a $1,000 catch-up contribution option for those between 50 and 59 ½ years old.